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Merck Investor Day
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2
FORWARD-LOOKING STATEMENTOF MERCK & Co., Inc., Kenilworth, N.J., USA
These presentations from Merck & Co., Inc., Kenilworth, N.J., USA (the “company”) include “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline products that the products will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s 2018 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s internet site (www.sec.gov).
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Welcome & Introductions
Financial & Value Creation Overview
Commercial Growth Drivers: KEYTRUDA & Beyond
Animal Health Innovation
Merck R&D Strategy Overview
Pipeline Opportunities
Future of Merck R&D: Panel Discussion
Q&A / Closing Remarks
Lunch Break
Breakout Sessions
Ken Frazier, Chairman and Chief Executive Officer
Rob Davis, Chief Financial Officer and Head of Global Services
Frank Clyburn, Chief Commercial Officer
Rick DeLuca, President, Merck Animal Health
Dr. Roger M. Perlmutter, President, Merck Research Laboratories
Dr. Roy Baynes, Head of Clinical Development and Chief Medical Officer, and Mike Nally, Chief Marketing Officer
Merck Research Laboratories Leadership: Dr. Dean Li, Dr. Fiona Marshall and Dr. Daria Hazuda
Pipeline Deep Dive
Next Generation Discovery
International Opportunity & China
TODAY’S AGENDA
All
All
Additional
members of
the Merck
leadership
team to join
after Q&A
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4
To discover, develop and
provide innovative products
and services that save and
improve lives around the world
AFTER MORE THAN
125 YEARS, OUR
MISSION REMAINS AS
CRITICAL AS EVER
Premier science-driven biopharmaceutical company
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TODAY’S INDUSTRY LANDSCAPE
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OPPORTUNITIESCHALLENGES
Rising cost of
healthcare and R&D
Pricing policy uncertainty
and shift to outcome-based
reimbursement in the U.S.
Increased molecular
target complexity
Intensified generic and
biosimilar competition
High unmet medical needs
of patients globally
Growing and aging
global population
New modalities
and technologies
accelerating innovation
More efficient and effective
clinical trial design through
advanced data analytics
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EVOLUTION AT MERCK OVER THELAST 5 YEARS
6
Revitalized focus on science-driven, integrated approach to R&D
Solidified leadership across key pillars of growth
Strengthened operating model to drive execution globally
Built energized leadership team and deep bench of talent
Strong momentum for continued growth
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CLEAR STRATEGIC PRIORITIES TO DRIVE CONTINUED LEADERSHIP
7
Advance
pipeline for
ongoing scientific
breakthroughs
Unlock full
commercial
potential of
portfolio
Drive
simplification
and culture
change
Deliver
sustainable,
profitable
growth
Ken
Fra
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Welcome & Introductions
Financial & Value Creation Overview
Commercial Growth Drivers: KEYTRUDA & Beyond
Animal Health Innovation
Merck R&D Strategy Overview
Pipeline Opportunities
Future of Merck R&D: Panel Discussion
Q&A / Closing Remarks
Lunch Break
Breakout Sessions
Ken Frazier, Chairman and Chief Executive Officer
Rob Davis, Chief Financial Officer and Head of Global Services
Frank Clyburn, Chief Commercial Officer
Rick DeLuca, President, Merck Animal Health
Dr. Roger M. Perlmutter, President, Merck Research Laboratories
Dr. Roy Baynes, Head of Clinical Development and Chief Medical Officer, and Mike Nally, Chief Marketing Officer
Merck Research Laboratories Leadership: Dr. Dean Li, Dr. Fiona Marshall and Dr. Daria Hazuda
Pipeline Deep Dive
Next Generation Discovery
International Opportunity & China
All
All
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WELL POSITIONED TO DELIVER STRONG SHAREHOLDER RETURNS
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Sustained
long-term
revenue growth
Meaningful
operating margin
expansion
Balanced and
disciplined capital
allocation
Investing in the business to innovate for patients globally
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GROWING REVENUE DRIVEN BY DEMAND FOR INNOVATION IN THE FACE OF PRICING HEADWINDS
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Leading oncology
portfolio with
significant growth
potential
Durable growth
with significant
competitive
advantages
Broad portfolio
delivering
demand-driven
growth
Global leader
delivering
above-industry
growth rates
Expect strong revenue growth every year, including
2023 – the year of greatest impact of JANUVIA LOE
1 Includes specialty products in the pipeline that have not yet launched
ONCOLOGY VACCINESHOSPITAL / SPECIALTY1
ANIMAL HEALTH
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FORTIFYING OUR FUTURE AHEAD OF THE CHANGING LANDSCAPE
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Creating headroom for innovation and sustainability of our mission
Becoming a leaner, more efficient, science-driven company to accelerate growth
• Focusing organization and resources on greatest opportunities for growth
• Evolving operating model and culture to be more agile and efficient
• Building optionality for next wave of innovation
Leveraging new digital capabilities and automation
• Better enable innovation
• Expand customer and patient reach
• Enhance supply chain efficiencies
• Simplify back office operations
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EXPECT MEANINGFUL OPERATING MARGIN EXPANSION & INCREASED ROIC
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Return on Invested Capital (%)1
1Excludes BD & Goodwill
Non-GAAP SG&A as % of sales
Non-GAAP R&D as % of sales
12%
11%10%
8%
14%
2014 2015 2016 2017 2018 2023
2014 2015 2016 2017 2018 2021 2022 2023
30%
2014 2015 2016 2017 2018 2021 2022 2023
20%
Non-GAAP Operating margin expansion (%)
2014 2015 2016 2017 2018 2021 2022 2023
40%
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R&D Investments: Continued investments in internal
innovation
CapEx: ~$16 billion of capital projects through 2022
focused on manufacturing capacity for our growth
businesses, R&D discovery buildout and IT
infrastructure
Dividends: Target payout ratio of 47%-50% over time
VALUE-CREATING CAPITAL ALLOCATION STRATEGY
13
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isAfter-Tax R&D CapEx Dividends Excess Capital forBD & Share Repo
Capital allocation priorities
over the next 5 years
Commitments
Expect to generate significant free cash flow over the next 5 years
Discretionary
1Assumes financing consistent with A1 rating
Business Development: Value-creating, bolt-on
acquisitions and strategic collaborations to further
enhance portfolio and pipeline
Share Repurchases: Return excess cash to
shareholders
Financing
Activity
1
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STRATEGIC BUSINESS DEVELOPMENT FUELING INNOVATION
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• Developing portfolio through value-creating
acquisitions
• Investments in innovative mechanisms and
technologies
Bolt-on acquisitions
• Meaningful partnerships across all stages of
development
• Working with a broad range of partners from
academia to biotech to pharma
Strategic collaborations and licensing
Completed ~60 transactions in 2018 spanning acquisitions,
licensing, technology deals and clinical collaborations
1Peloton expected to close in 3Q 2019
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POSITIONED TO DRIVE SUSTAINABLE GROWTH AND SHAREHOLDER VALUE
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Sustained long-term revenue growth including 2023 – the year
of greatest impact of JANUVIA LOE
Meaningful operating margin expansion through strong revenue
growth driving favorable mix and further leveraged by expense
productivity, thoughtful resource allocation and simplification
Value-creating capital allocation strategy to enable growth and
return of capital to shareholders
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Welcome & Introductions
Financial & Value Creation Overview
Commercial Growth Drivers: KEYTRUDA & Beyond
Animal Health Innovation
Merck R&D Strategy Overview
Pipeline Opportunities
Future of Merck R&D: Panel Discussion
Q&A / Closing Remarks
Lunch Break
Breakout Sessions
Ken Frazier, Chairman and Chief Executive Officer
Rob Davis, Chief Financial Officer and Head of Global Services
Frank Clyburn, Chief Commercial Officer
Rick DeLuca, President, Merck Animal Health
Dr. Roger M. Perlmutter, President, Merck Research Laboratories
Dr. Roy Baynes, Head of Clinical Development and Chief Medical Officer, and Mike Nally, Chief Marketing Officer
Merck Research Laboratories Leadership: Dr. Dean Li, Dr. Fiona Marshall and Dr. Daria Hazuda
Pipeline Deep Dive
Next Generation Discovery
International Opportunity & China
All
All
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COMMERCIAL PRIORITIES TO DRIVE FURTHER GLOBAL GROWTH
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Build on leading
position across key
growth pillars
Capitalize on
global growth
opportunities
Successfully
execute new
launches
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CURRENT PILLARS HAVE EXPANSION OPPORTUNITIES AHEAD
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ONCOLOGY VACCINESHOSPITAL
PORTFOLIO
Visibility into growth drivers over the next 5 years
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ONCOLOGY: DRIVING GLOBAL LEADERSHIP
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Broad-based
TKI
Foundational cancer
treatment
Market-leading
PARPi
27Indications
15Tumor types
+ MSI-H
>200KPatients treated
Strong foundation with long runway for growth ahead
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KEYTRUDA: SIGNIFICANT GLOBAL GROWTH OPPORTUNITIES
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• Building on leadership in lung with
additional reimbursement rolling out across
Europe and other markets
• Encouraged by early adoption in RCC and
adjuvant melanoma launches
• Excited to extend H&N leadership with
recent 1L approval
• Indications expected to more than double
over next 5 years
o Earlier lines of therapy, including
adjuvant / neoadjuvant
o New combinations
o New tumor types
KEYTRUDA is one of the best-selling
drugs 6 years after launch
Source: EvaluatePharma; KEYTRUDA Year 6 sales represent 1Q 2019 sales annualized. Sales in $ billions and not inflation adjusted
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
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LYNPARZA: SET FOR SUSTAINED CLASS LEADERSHIP
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• Lynparza has class leadership in the U.S., with ~60% of total PARPi prescriptions
• The only PARPi with 1L maintenance indication in ovarian cancer based on strong results from SOLO-1
• POLO data represents new opportunity in gBRCAm pancreatic cancer patients
• Additional indications with monotherapy and combinations with KEYTRUDA to drive significant growth going forward
Growth opportunities
across multiple tumor types
Ovariancancer
Prostate cancer
Breastcancer
Pancreaticcancer
and more ...
In collaboration with AstraZeneca
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LENVIMA: ESTABLISHING AS TKI OF CHOICE
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• Approved in markets worldwide in RCC, HCC and differentiated thyroid cancer
• Significant opportunity in China given prevalence of HCC in the market
• Strong commercial collaboration sets foundation for execution in many future indications
• 13 studies in combination with KEYTRUDA, including NSCLC, endometrial carcinoma and RCC
Renal cellcarcinoma
Lungcancer
Hepatocellularcarcinoma
and more …
In collaboration with Eisai
Endometrialcarcinoma
Thyroidcancer
Growth opportunities
across multiple tumor types
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ONCOLOGY: POTENTIAL FOR >50 ADDITIONAL INDICATIONS OVER NEXT 5 YEARS
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Potential to nearly triple oncology indications by 2023
Proportion of expected
indications by product
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VACCINES: GROWING GLOBAL BUSINESS WITH NEAR- AND LONG-TERM OPPORTUNITIES
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• Significant long-term opportunity for pediatric and adult vaccines growth around the world
• High barriers-to-entry supporting sustained, durable position
• Investing in vaccines manufacturing capacity to increase doses produced globally
• Strong pipeline in pneumococcal disease, respiratory syncytial virus (RSV), cytomegalovirus (CMV), dengue and others
Nearly doubled vaccines
revenue since 2010
GARDASIL
GARDASIL
GARDASIL
PROQUAD-MMR-VARIVAX
PROQUAD-MMR-VARIVAX
PROQUAD-MMR-VARIVAX
PNEUMOVAX 23
PNEUMOVAX 23
PNEUMOVAX 23
ROTATEQ
ROTATEQ
ROTATEQ
ZOSTAVAX
ZOSTAVAX
ZOSTAVAX
Other
Other
Other
2010 2014 2018
$5.7B
$7.3B
$3.8B
Merck started recording vaccines sales in the 19 European countries previously part of the SPMSD
vaccines joint venture starting in January 1, 2017
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GARDASIL: POSITIONED FOR RENEWED GROWTH
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• Growth driven by global appeals to eliminate cervical cancer
• Reacceleration of growth driven by expansion into new geographies, public and gender-neutral immunization programs and age cohorts
• Fastest pharmaceutical launch in China
• Significant opportunity ahead given only ~3% of the world’s eligible population has received an HPV vaccine
Current indications of GARDASIL 9
Not indicated
Global incidence of HPV-related
cancers & diseases
17,300,000
11,000
14,400,000
13,000
Millions of cases
18,200
528,000
Penile cancer
Oropharynx cancer
Recurrent Respiratory
Papillomatosis
Anal cancer
Genital warts
Cervical cancer
Vulvar & vaginal
cancer
Cervical dysplasia
Male FemaleCommon
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HOSPITAL PORTFOLIO: OPTIMIZED BY GLOBAL STRENGTH AND SCALE
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BRIDION poised for continued growth
worldwide as number of surgeries that
use a reversal agent increases
Leading portfolio of antibiotics and
antifungals, including novel products
Recent launches build on our HIV legacy
and further position us to bring next
generation treatments to market
Sizable HAB/VAB pneumonia
indication represents new
opportunity for ZERBAXA growth
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United
States
Canada
Europe¹
Latin
America
Eastern Europe /
Middle East
Africa Asia
Pacific
Ex-China
Japan
+14%
China
+4%
+3%
+9%
+25%
+12%
-4%
INNOVATIVE PORTFOLIO AND WAVE OF INDICATIONS DRIVING GLOBAL GROWTH
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Human health sales outside of the U.S. grew 12% in 1Q 2019
All growth rates exclude the impact of exchange and represent 1Q 2019 vs. 1Q 2018. Growth contributors represent select growth drivers across pillars of growth.1 Europe primarily represents all European Union countries and the European Union accession markets
+67%
Growth Contributors:
GARDASIL
KEYTRUDA
JANUVIA
Hospital Acute Care
Growth Contributors:
KEYTRUDA
GARDASIL
Pediatric Vaccines
BRIDION
Lynparza
Lenvima
Growth Contributors:
KEYTRUDA
Lenvima
Lynparza
BELSOMRA
Growth Contributors:
GARDASIL
Pediatric Vaccines
BRIDIONGrowth Contributors:
KEYTRUDA
Pediatric Vaccines
GARDASIL
Hospital Acute Care
Growth Contributors:
KEYTRUDA
GARDASIL
Pediatric Vaccines
BRIDION
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43%
30%
25%24%
23%
18% 18% 18%16%
15%14%
12%
9%7%
4%
Merck MNC MNC MNC MNC MNC MNC MNC MNC MNC MNC MNC MNC MNC MNC
CHINA BECOMING NEW PILLAR OF GROWTH
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Fastest growing multinational pharmaceutical company
Growth percentage over prior 18 months through 1Q 2019 for Top 15 multinationals..
Source: R&D-Based Pharmaceutical Association Committee (RDPAC) Report
Average: 11%
Pivoting portfolio
to innovation
Reaching more patients &
expanding customer base
1
1Only includes Human Health portion of business
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CONFIDENT IN GROWTH OPPORTUNITIES AND ABILITY TO EXECUTE
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Innovative portfolio
with significant
demand-driven
growth
Significant
international
opportunities,
notably in China
World-class
commercial teams
executing in a
changing environment
Commercial foundation for sustained global growth
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Welcome & Introductions
Financial & Value Creation Overview
Commercial Growth Drivers: KEYTRUDA & Beyond
Animal Health Innovation
Merck R&D Strategy Overview
Pipeline Opportunities
Future of Merck R&D: Panel Discussion
Q&A / Closing Remarks
Lunch Break
Breakout Sessions
Ken Frazier, Chairman and Chief Executive Officer
Rob Davis, Chief Financial Officer and Head of Global Services
Frank Clyburn, Chief Commercial Officer
Rick DeLuca, President, Merck Animal Health
Dr. Roger M. Perlmutter, President, Merck Research Laboratories
Dr. Roy Baynes, Head of Clinical Development and Chief Medical Officer, and Mike Nally, Chief Marketing Officer
Merck Research Laboratories Leadership: Dr. Dean Li, Dr. Fiona Marshall and Dr. Daria Hazuda
Pipeline Deep Dive
Next Generation Discovery
International Opportunity & China
All
All
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• Global scale
• Revenue growth above market
• Strong profit contribution
• Innovative new product solutions
• Technologies that drive customer
value
• Merck synergies
MERCK ANIMAL HEALTH IS A MARKET LEADER
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Genetics
Nutrition
Food safety
Diagnostics
Livestock
Diagnostics
Vet services
OTC medicines
Pet supplies
Companion
Animal
STRONG LONG-TERM METRICS FOR THE ANIMAL HEALTH INDUSTRY
Pharmaceuticals
Vaccines
Solutions
Platforms
Monitoring
Identification
Merck
Animal Health
Predictable and sustainable
growth drivers
Population
growth
Rising middle
class
Increasing
urbanization
CAGR mid-single digits1
At the core of a $34+ billion industry
1 Forward-Looking Projection
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MERCK ANIMAL HEALTH:
OUTPERFORMING THE INDUSTRY
ANNUAL NET SALES GROWTH (%)
Source: Merck Internal Data, ex-exchange, excluding Zilmax. Industry Review
9.0 9.38.4
10.5
9.0
6.25.4
6.5
3.4
5.8
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2014 2015 2016 2017 2018
Industry
Merck
33
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MERCK ANIMAL HEALTH
Global leader in pharmaceuticals, vaccines, health management
solutions and emerging digital technology
9,400 Colleagues
800+
Product
families
38%
62%
Companion
Animal
Livestock
71%
U.S.
International
2018 Sales
29%
Products in more than
150 Markets
Operating in more than
50 Countries
102BILLION
Vaccine doses
produced annually
34Dedicated
manufacturing
sites
12Major manufacturing
technologies &
platforms
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Ruminants30%
Companion Animal38%
Swine14%
Poultry17%
Aquaculture1%
United States29%
EURAM & Canada
42%
LATAM13%
ASIA PAC16%
Top 10 Products
38%
All Others62%
OUR DIVERSE PORTFOLIO PROVIDES STRENGTH
2018 RESULTS
Revenue by
species
Revenue by
geography
Revenue by
product line
Anti-infectives11%
Biologics46%
Other17%
Parasiticides26%
Revenue by
therapeutic area
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Millsboro, DE
Boxmeer,
NLD
Elkhorn, NE
De Soto, KS
Schwabenheim,
DEU
Biologicals R&D
Pharma R&D
Bergen, NOR
Madison &
Rahway, NJ
Macquarie Park,
AUS
Bendigo, AUS
Malelane, ZAF
Tokyo, JPN
Singapore, SGP
Ames, IA
Ningbo, CHN
Cologne,
FRA
Cambridge, UKBoise, ID
Vitré, FRA
Netanya, ISR
Antelliq Innovation Centers
DEDICATED ANIMAL HEALTH R&D NETWORK
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>150 Geo-expansion licenses annually
MERCK ANIMAL HEALTH: CONSISTENT DELIVERY OF SIGNIFICANT NEW PRODUCT APPROVALS
9 10
1518
14
2014 2015 2016 2017 2018
Over Approvals in 5 Years 66
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Strategic Advantages
Best-in-class
First-in-class
Vaccine leadership
Delivery technologies
Compound libraries
Diagnostic labs
OUR INNOVATION PATHWAYS
In-house Discovery and Technology
• Biologics
• Recombinant vaccines, RP technology
• Emerging diseases
• Delivery technologies
Merck Research Laboratories
• Monoclonal antibodies
• Oncology
• Diabetes, atopy, osteoarthritis
• Shared vaccine technologies
External Partnerships/Business Development
• Parasiticides
• Internal medicine
• Devices
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Food Safety
MRL
MERCK ANIMAL HEALTH
R&D AREAS OF FOCUS: ACROSS SPECIESVACCINES BIOPHARMACEUTICALS PHARMACEUTICALS
Customer
convenience,
oral/mucosal
delivery,
long duration
Non-conventional
antimicrobials
Parasiticides &
Endectocides
Production
enhancement
reproduction,
growth
Merck Research
Laboratories (MRL)
Collaborations
Zoonotic &
Emerging Diseases
MRL
Atopy / Allergy
MRL
Oncology
MRL
Internal medicine,
pain, endocrinology,
osteoarthritis
MRL
MRL
Anti-Infectives
MRL
Respiratory
Diseases
Enteric
Diseases
MRL
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COMPLEMENTARY BUSINESS DEVELOPMENT
Geo-expansion: vaccines, pharmaceuticals
High-growth markets
Zhejiang Zhengli
Antoo Biotech Co
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PRODUCTS CONVENIENCE PREDICTIVE SOLUTIONS
INVESTING IN HIGH-GROWTH
ANIMAL HEALTH OPPORTUNITIES
+ +
Trends Driving
Technology
Adoption
• Productivity
• Wellness
• Traceability
• Safety
• Automation
Vaccines &
Pharmaceuticals
Market Opportunities
Cu
sto
me
r V
alu
e Innovative Delivery Solutions
Technology & Data
Animal Health Ventures
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42
INVESTING IN DIGITALLY-ENABLED CUSTOMER SOLUTIONS
>500 million animals
tagged per year
>100 million pets monitored
>1,100 aqua monitoring
stations worldwide
Non–invasive tool that
confirms bovine respiratory
disease and gauges its
severity in eight seconds
Sea lice counter
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✓ Broad global portfolio and presence
✓ Innovative products and solutions
✓ R&D excellence and access to MRL
expertise
✓ High-quality manufacturing and
supply
✓ Investment in digital technology to
drive customer productivity
✓ Track record of execution
MERCK ANIMAL HEALTH:OUR COMPETITIVE ADVANTAGE
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44
THE SCIENCE OF HEALTHIER ANIMALS®
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45
Welcome & Introductions
Financial & Value Creation Overview
Commercial Growth Drivers: KEYTRUDA & Beyond
Animal Health Innovation
Merck R&D Strategy Overview
Pipeline Opportunities
Future of Merck R&D: Panel Discussion
Q&A / Closing Remarks
Lunch Break
Breakout Sessions
Ken Frazier, Chairman and Chief Executive Officer
Rob Davis, Chief Financial Officer and Head of Global Services
Frank Clyburn, Chief Commercial Officer
Rick DeLuca, President, Merck Animal Health
Dr. Roger M. Perlmutter, President, Merck Research Laboratories
Dr. Roy Baynes, Head of Clinical Development and Chief Medical Officer, and Mike Nally, Chief Marketing Officer
Merck Research Laboratories Leadership: Dr. Dean Li, Dr. Fiona Marshall and Dr. Daria Hazuda
Pipeline Deep Dive
Next Generation Discovery
International Opportunity & China
All
All
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47
Welcome & Introductions
Financial & Value Creation Overview
Commercial Growth Drivers: KEYTRUDA & Beyond
Animal Health Innovation
Merck R&D Strategy Overview
Pipeline Opportunities
Future of Merck R&D: Panel Discussion
Q&A / Closing Remarks
Lunch Break
Breakout Sessions
Ken Frazier, Chairman and Chief Executive Officer
Rob Davis, Chief Financial Officer and Head of Global Services
Frank Clyburn, Chief Commercial Officer
Rick DeLuca, President, Merck Animal Health
Dr. Roger M. Perlmutter, President, Merck Research Laboratories
Dr. Roy Baynes, Head of Clinical Development and Chief Medical Officer, and Mike Nally, Chief Marketing Officer
Merck Research Laboratories Leadership: Dr. Dean Li, Dr. Fiona Marshall and Dr. Daria Hazuda
Pipeline Deep Dive
Next Generation Discovery
International Opportunity & China
All
All
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BROAD ONCOLOGY STRATEGY TO IMPROVE OUTCOMES FOR CANCER PATIENTS GLOBALLY
Dr. R
oy B
ayn
es
Establish KEYTRUDA as foundational treatment
across most tumor types and stages of disease
Identify patients
most likely to benefit
using biomarkers
Broadly explore
combinations to reach
more patients
Advance pipeline and
pursue strategic
collaborations and
acquisitions to expand
portfolio
481Peloton acquisition expected to close in 3Q 2019
1
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KEYTRUDA: BROAD ACTIVITY IN >25 CANCER TYPES
-100
0
100
-100
0
100
-100
0
100
-100
0
100
-100
0
100
-100
0
100
-100
0
100NSCLC
-100
0
100Gastric
-100
0
100
-100
0
100
H&N TNBC
-100
0
100cHL Urothelial
Ch
an
ge f
rom
ba
se
lin
e i
n t
um
or
siz
e (
%)
-100
0
100
Mesothelioma
-100
0
100
Anal
-100
0
100
-100
0
100
SCLC
-100
0
100
NPC
HCC
Esophageal
-100
0
100
Ovarian
-100
0
100
ER+/HER2– BC Cervical Thyroid Salivary Endometrial
-100
0
100
Melanoma
-100
0
100
NHL PMBCL
-100
0
100
Biliary Tract
-100
0
100
Prostate GBM
-100
0
100
-100
0
100
MSI-H CRC
-100
0
100
-100
0
100
Carcinoid
-100
0
100pNET
-100
0
100
ccRCC
nccRCC
-100
0
100MSI-H non-CRC
-100
0
100Merkel Cell
= cancer types
with approved
indications
Dr. R
oy B
ayn
es
-
KEYTRUDA: REPEATED OVERALL SURVIVAL BENEFITS IN MONOTHERAPY AND IN COMBINATION
50
Ipi-Naive Melanoma, Any PD-L1
KEYNOTE-006Pembro vs Ipi
2L+ NSCLC, TPS ≥50%KEYNOTE-010
Pembro vs Docetaxel
2L+ NSCLC, TPS ≥1%KEYNOTE-010
Pembro vs Docetaxel
2L Bladder, Any PD-L1KEYNOTE-045
Pembro vs Chemo
1L NSCLC, TPS ≥50%KEYNOTE-024
Pembro vs Chemo
1L NSCLC, TPS ≥50%KEYNOTE-042
Pembro vs Chemo
1L NSCLC, TPS ≥20%KEYNOTE-042
Pembro vs Chemo
1L NSCLC, TPS ≥1%KEYNOTE-042
Pembro vs Chemo
1L Esophageal, CPS ≥10
KEYNOTE-181Pembro vs Chemo
1L HNSCC, CPS ≥20KEYNOTE-048
Pembro vsEXTREME
1L HNSCC, CPS ≥1KEYNOTE-048
Pembro vsEXTREME
0 1 0 2 0 3 0 4 0 5 0 6 0
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
2 9 0 1 7 8 1 3 1 1 0 1 1
1 5 2 5 8 2 9 2 1 1
5 0
1 0
0
0
0 1 0 2 0 3 0 4 0 5 0 6 0
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
6 9 0 3 7 4 2 4 8 1 7 1 5
3 4 3 1 3 5 5 7 4 0 2
8 6
2 0
0
0
0 6 1 2 1 8 2 4 3 0 3 6
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
1 5 4 1 2 1 1 0 6 8 9 5
1 5 1 1 0 7 8 0 6 1 5
5 2
3 1
0
0
0 6 1 2 1 8 2 4 3 0 3 6 4 2
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
2 9 9 2 2 4 1 8 9 1 0 7 2 2
3 0 0 2 3 1 1 4 9 7 5 1 1
5 9
4 0
0
0
2
1
0 6 1 2 1 8 2 4 3 0 3 6 4 2
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
4 1 3 3 0 5 2 5 1 1 4 4 2 4
4 0 5 3 1 3 2 1 0 1 0 6 1 4
7 3
5 3
0
0
2
1
0 6 1 2 1 8 2 4 3 0 3 6 4 2
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
6 3 7 4 6 3 3 6 5 2 1 4 3 5
3 6 7 4 8 5 3 1 6 1 6 6 2 4
1 1 2
8 8
0
0
2
1
0 4 8 1 2 1 6 2 0 2 4 2 8 3 2
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
1 0 7 8 6 5 9 4 5 1 3
1 1 5 7 6 4 8 2 3 4
2 9
1 4
0
0
5
3
1
2
0 5 1 0 1 5 2 0 2 5 3 0 3 5 4 0
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
1 3 3 1 0 6 8 5 6 5 2 4
1 2 2 1 0 0 6 4 4 2 1 2
4 7
2 2
0
0
1 1
5
2
0
0 5 1 0 1 5 2 0 2 5 3 0 3 5 4 0
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
2 5 7 1 9 6 1 5 2 1 1 0 3 4
2 5 5 2 0 7 1 3 1 8 9 2 1
7 4
4 7
0
0
1 7
9
2
1
0 4 8 1 2 1 6 2 0 2 4 2 8 3 2 3 6
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
2 7 0 1 9 5 1 4 8 1 1 6 8 0
2 7 2 1 7 3 1 0 9 7 3 4 2
9 8
5 9
0
0
6 7
3 4
3 3
1 8
7
4
0 1 0 2 0 3 0 4 0 5 0 6 0
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
5 5 6 4 1 6 3 1 7 2 6 4
2 7 8 1 5 8 1 1 1 9 4
0
0
2 3 3
8 5
0
0
0 6 1 2 1 8 2 4 3 0 3 6 4 2
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
2 5 6 1 6 2 1 2 0
2 5 0 1 9 2 1 1 4
9 4
7 5
0
0
5 9
3 8
2 3
1 5
4
2
0 6 1 2 1 8 2 4 3 0 3 6 4 2
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
9 2 6 2 5 2
9 0 7 0 4 2
4 5
2 8
0
0
3 2
1 6
1 3
7
4
0
0 4 8 1 2 1 6 2 0 2 4 2 8 3 2
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
2 7 8 2 3 7 1 9 0 1 1 0
1 3 5 1 1 3 8 4 4 2
1 5 2
6 5
0
0
5 7
2 3
1 6
8
1
1
0 5 1 0 1 5 2 0 2 5 3 0 3 5 4 0 4 5 5 0
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
3 0 1 2 2 6 1 7 2 1 2 5 7 5
3 0 0 2 4 5 1 5 8 1 0 7 5 1
9 9
7 2
0
0
4 6
2 8
2 2
1 1
1 3
6
1
0
0 5 1 0 1 5 2 0 2 5 3 0
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
2 4 7 1 6 0 1 0 3
2 4 8 1 5 1 8 2
4 8
3 4
0
0
1 4
1 0
2
1
2L+ HNSCC, Any PD-L1KEYNOTE-040
Pembro vs SOC
2L HCC, Any PD-L1KEYNOTE-240
Pembro vs Placebo
1L HNSCC, Any PD-L1KEYNOTE-048
Pembro vs EXTREME
1L Gastric, CPS ≥1KEYNOTE-062
Pembro vs Chemo
1L Gastric, CPS ≥10KEYNOTE-062
Pembro vs Chemo
1L NSQ NSCLC, Any PD-L1KEYNOTE-189
Pembro + Pem/Platinum vsPlacebo + Pem/Platinum
0 3 6 9 1 2 1 5 1 8 2 1
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
4 1 0 3 7 7 3 4 7 2 7 8 7 1
2 0 6 1 8 3 1 4 9 1 0 4 2 5
1 6 3
5 9
0
0
1 8
8
0 4 8 1 2 1 6 2 0 2 4
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
4 3 2 4 1 7 3 7 8 2 5 6 1 8
4 2 9 4 0 1 3 4 1 2 1 1 2 0
1 3 6
1 1 0
0
0
1L RCC, Any PD-L1KEYNOTE-426
Pembro + Axitinib vsSunitinib
1L SQ NSCLC, Any PD-L1KEYNOTE-407
Pembro + Carboplatin/Taxane vsPlacebo + Carboplatin/Taxane
0 3 6 9 1 2 1 5 1 8 2 1
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
2 7 8 2 5 6 1 8 8 1 2 4 1 7
2 8 1 2 4 6 1 7 5 9 3 1 6
6 2
4 5
0
0
2
4
1L HNSCC, CPS ≥1KEYNOTE-048
Pembro + Platinum vsEXTREME
0 5 1 0 1 5 2 0 2 5 3 0 3 5 4 0
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
M o n t h s
OS
, %
N o . a t R is k
2 8 1 2 2 7 1 6 9 1 2 2 4 0
2 7 8 2 2 7 1 4 7 1 0 0 2 0
7 5
5 1
0
0
1 0
5
1
1
Dr. R
oy B
ayn
es
-
KEYTRUDA: STILL IN EARLY INNINGS OF DEVELOPMENT
Continuing to build a wall of data
51
Dr. R
oy B
ayn
es
>1,000Ongoing
clinical
trials
Registrational trials
underway
>75
Combination trials
>600
Trials in
adjuvant / neoadjuvant
and earlier lines
>100
-
KEYTRUDA: ROBUST I-O PROGRAM IN ADJUVANT / NEOADJUVANT AND EARLIER LINES OF THERAPY
Many registrational trials with readouts over the coming years
2018Adjuvant Melanoma (KN-054)
APPROVED
2019TNBC Neoadjuvant /
Adjuvant (KN-522)
cSCC Locally Advanced
(KN-629)
2021NSCLC Adjuvant (KN-091)
HNSCC Adjuvant /
Neoadjuvant (KN-689)
2022Adjuvant Melanoma (KN-716)
RCC Adjuvant (KN-564)
2L NMIBC (KN-057)
MIBC Locally Advanced
(KN-676)
2023Gastric & Esophageal Adjuvant
/ Neoadjuvant (KN-585)
HNSCC Locally Advanced
(KN-412)
2024NSCLC Neoadjuvant (KN-671)
2026+TNBC Adjuvant (KN-242)
cSCC Locally Advanced (KN-630)
ER+ / HER2- Breast Cancer
Adjuvant / Neoadjuvant (KN-756)
2025Adjuvant / Neoadjuvant MIBC (KN-866)
Adjuvant / Neoadjuvant MIBC (KN-905)
HCC Adjuvant (KN-937)
NSCLC Stage I/IIa (KN-867)
52
Dr. R
oy B
ayn
es
-
KEYTRUDA: EARLY EVIDENCE IN BREAST CANCER; 10 ONGOING TRIALS
53
ypT0 ypN0
ypT0/Tis ypN0
Encouraging results from KEYNOTE-173 show promise
in adjuvant / neoadjuvant settings
Cohort C:
KNpCb /
KAC Reg 2
Path
olo
gic
al
Co
mp
lete
Re
spo
nse
(%
)
N = 60
K = KEYTRUDA
Np = Nab-pac
A = doxorubicin
C = cyclophosphamide
Cb = carboplatin
T = paclitaxel
Cohort A:
KNp / KAC
Cohort B:
KNpCb /
KAC Reg 1
Cohort D:
KNpCb /
KAC Reg 3
Cohort E:
KTCb /
KAC Reg 1
Cohort F:
KTCb /
KAC Reg 2
Dr. R
oy B
ayn
es
10
20
30
40
50
60
70
80
90
100
-
KEYTRUDA: EARLY STAGE PROSTATE CANCER DATA INFORM PHASE 3 DEVELOPMENT PROGRAM
KEYNOTE-365 Cohort B
KEYTRUDA+Docetaxel
KEYNOTE-365 Cohort C
KEYTRUDA+Enzalutamide
KEYNOTE-365 Cohort A
KEYTRUDA+Lynparza
54
Dr. R
oy B
ayn
es
• 11/25 (44%) experienced reduction in tumor burden
• 6/25 (24%) experienced reduction ≥ 30%
-
BROADEST PROSTATE CANCER PROGRAM WITH
MULTIPLE PH 3 TRIALS ADDRESSING 40% OF PATIENTS
ADT = androgen deprivation therapy; BCR = biochemical recurrence; CRPC = castration-resistant prostate cancer; EBRT = external beam radiation therapy; HSPC = hormone-sensitive prostate cancer; PCa = prostate cancer;
RP = radical prostatectomy.
*CI indicates estimated ARCHES approval as of 4Q 2019
Hormone-sensitive Castration-resistant
Asymptomatic Symptomatic
Time
Non-metastatic Metastatic
PS
A
PrimaryMet HSPC
(incl de novo)
mCRPC
Pre-CTx
mCRPC
CTx
mCRPC
Post-CTx
Non-metastatic
CRPC
(M0)
Adjuvant
Met
Biochemical
Recurrence (BCR)
KN-199 Cohort
1-3
KN-365 Cohort
C
KN-641 Ph3
Pembro /
Enzalutamide
KN-199 Cohort
4, 5
KN-921 Ph3
Pembro /
DocetaxelKEYLYNK-010 Ph3
Pembro / Olaparib
PROfound
Ph3 olaparib
mono
(post-NHA)
PROpel
Ph3 olaparib /
abiraterone
Ph3 mHSPC Pembro /
Enzalutamide
(New trial to be posted)
55
= KEYTRUDA combo trials
Dr. R
oy B
ayn
es
= Lynparza trials
-
LYNPARZA: SHOWING EFFICACY BEYONDWOMEN’S CANCERS
• 1L, nonBRCA, KEYTRUDA combo (KEYLYNK-001)
• 1L Maintenance BRCA+ (SOLO-1) - Approved
• 1L Maintenance, All Comers Combo + Bev (PAOLA-1)
• PSR, All Comers Combo + Cediranib (GY004)
• PRR, All Comers Combo + Cediranib (GY005)
• 2L+ PSR (SOLO2/Study19 ) - Approved
• 3L+ PSR, gBRCA Treatment (SOLO3)
• mBC, gBRCA (OlympiAD) - Approved
• HER2- Adjuvant, gBRCAm (OlympiA)
• 1L Maintenance gBRCA
(POLO)
• mCRPC, All Comers (KEYLYNK-010)
• mCRPC, HRRm (PROfound)
• mCRPC, All Comers Combo + Abiraterone
(PROpel)
• 1L NSQ NSCLC (KEYLYNK-006)
• 1L SQ NSCLC (KEYLYNK-008)
• HRRm Basket (LYNK-002)
BreastCancer
LungCancer
TumorAgnostic
56
Ovarian cancer
Demonstrating potential in prostate cancer, pancreatic cancer and more
Breastcancer
Pancreaticcancer
Prostatecancer
Lung cancer
Tumoragnostic
PRR: Platinum Relapsed Recurrent; PSR: Platinum Sensitive Recurrent
Collaboration with AstraZeneca
Dr. R
oy B
ayn
es
-
LENVIMA: POTENTIAL ACROSS BROAD RANGE OF TUMOR TYPES
• 1L RCC Combo with Evero or
KEYTRUDA (KN-581 / Study 307)
• 2L Combo with Evero
(Study 205) - Approved
• 1L (LEAP-001)
• 2L (Study 309 / KN-775)
• 1L HCC Combo (LEAP-002)
• 1L HCC Mono (Study 304) – Approved
• 1L (LEAP-003)
• 2L (LEAP-004)
• 1L (LEAP-011)
• 1L and 2L:
Planning Stages
• TNBC
• Gastric
• Ovarian
• Colorectal
• Glioblastoma
• Biliary
• 1L NSQ Combo with KEYTRUDA
and Chemo (LEAP-006)
• 1L PD-L1+ (LEAP-007)
• 2L NSQ (LEAP-008)
• 1L Thyroid -
Approved
Endometrialcarcinoma
Hepatocellular carcinoma
Melanoma
Renal cell carcinoma
Thyroidcancer
Lungcancer
Urothelialcancer
Head & neck cancer
Basket trial
57
13 trials studying KEYTRUDA in combination
with Lenvima spanning >13 tumor types
Collaboration with Eisai
Dr. R
oy B
ayn
es
-
EXTENSIVE ONCOLOGY PIPELINE COVERING ALL ASPECTS OF THE TUMOR ENVIRONMENT
58
Dr. R
oy B
ayn
es
CCR5
CXCR2
GITR
IDO/TDO
ILT3
ILT4
IL10
LAG-3
PD-1
PD-1/LAG-3 bi-specific
Pi3K-delta
TGFβ
TIGIT
TLR4
CD27
CTLA4
CVA21
Other cancer
vaccines and viruses
PCVs
RIG-I
STING
CDK
ERK
-
Source: EvaluatePharma
$0
$50
$100
$150
$200
$250
$300
2019 2028
IO/PARP/VEGF/R
Cytotoxic, CD20, CDK, BTK, CD38
Hormonal, EGFR, HER 2/3, Other, OtherTargeted, Next Wave
ESTABLISHING LEADERSHIP IN GROWING ONCOLOGY MARKET
• Largest I-O clinical development program in the industry
• Sizable long-term opportunity in new tumor types, including TNBC and prostate cancer
• Broad combination program with Lynparza, Lenvima and others
• Significant long-term opportunities in adjuvant / neoadjuvant settings
59
Well positioned to grow faster than the market
Mik
e N
ally
Global oncology market potential ($B)
-
EARLY STAGE – INCLUDING ADJUVANT / NEOADJUVANT – REPRESENTS SIGNIFICANT PORTION OF CANCER PREVALENCE
60
Early stage
Metastatic
Unknown
HEAD AND NECK
Early stage
Metastatic
Unknown
BLADDER
Early stage
Metastatic
Unknown
BREAST
Early stage
Metastatic
Unknown
LUNG
Early stage
Metastatic
Unknown
RENAL
Early stage
Metastatic
Unknown
MELANOMA
Source: SEER 2018: Cancer Prevalence by Stage in U.S.
18 registrational trials across these tumor types and more,
representing meaningful growth opportunity
Mik
e N
ally
-
ADDRESSING TUMOR TYPES WITH HIGHEST INCIDENCE, INCLUDING BREAST AND PROSTATE
Breast cancer market expected
to grow to $38B by 20281
• TNBC represents 10-15% and ER+/HER2- represents
~65% of all breast cancers
• Program addresses different stages of disease and
lines of therapy
Prostate cancer market expected
to grow to $15B by 20281
• mCRPC represents 20% and mHSPC represents 20% of
all prostate cancers
• Broadest I-O development program addressing all
stages of mCRPC and moving into mHSPC
61
Source: GLOBOCAN 2018. International Cancer Research Agency 2018
Global incidence
of top tumor types
Mik
e N
ally
Lung
Breast
Colorectal
Prostate
Stomach
LiverEsophageal
Cervical
Other cancers
2,093,876 (11.6%)
2,088,849 (11.6%)
1,849,518 (10.2%)
1,276,106 (7.1%)
1,033,701 (5.7%)
841,080 (4.7%)572,034 (3.2%)
569,847 (3.2%)
7,753,946 (42.9%)
1Representative of U.S., EU5, and Japan
-
EXTENSIVE VACCINES PIPELINE TARGETING DISEASES WITH SIGNIFICANT UNMET NEED
HPV=Human papillomavirus; PCV=Pneumococcal conjugate vaccine; CMV=Cytomegalovirus; RSV=Respiratory syncytial virus
PCV CMV EbolaRSVHPV Dengue
• Supporting global
appeals to
eliminate cervical
cancer by
improving access
to GARDASIL
• Increasing
gender-neutral
vaccination
62
• Need for
prevention
of residual
disease
• 13 Phase 3
trials across
adults and
pediatrics
for V114
• Major unmet
medical need
in infants and
elderly
• Leading non-
genetic cause
of neurologic
disability
• Identified by
CDC / FDA
and others as
area of critical
need
• Major cause of
hemorrhagic fever
and death
• Partnership with
Instituto Butantan
allows early
access to Phase 3
study results
• Licensing
application
under review
at FDA, EMA,
WHO and
African
countries
Others
• Addressing key
areas of unmet
need with broad
early vaccine
pipeline
V114 Adults & Peds
V116
Other PCVs
MK-1654
V172 (Moderna)V160 V181
Instituto ButantanV920GARDASIL
Dr. R
oy B
ayn
es
-
GROWING GLOBAL DEMAND FOR VACCINES PROVIDES SUSTAINABLE MARKET OPPORTUNITY
Growth over the next decade driven by:
• Increasing Coverage: Driving penetration
of inline products in high income markets
(U.S./EU)
• Globalization: Expanding markets and
increasing penetration for inline and future
pipeline products
• Innovation: Launching pipeline products
1Source: Evaluate Pharma, IMS, Company reports, DCVM projections
Global vaccines market potential ($B)1
2018
$35
2023
$40 - $45
2028
$55 - $65
+6%
63
Mik
e N
ally
-
UNIQUE PNEUMOCOCCAL PORTFOLIO TARGETING PROTECTION IN ADULTS AND CHILDREN
64
• Unique combination of serotype coverage and cost effectiveness
PNEUMOVAX 23
Foundation of adult
prevention
• Potential to establish long-term leadership in pediatric market
OTHER PCVs
Aiming for broadest
protection for pediatric
population
• Focus on potential to broaden protection in adult population
V116
Targeted approach
to adult prevention
• Expanded serotype coverage to potentially address the highest burden of pneumococcal disease
V114
Advancing protection
across pediatric and
adult populations
NEXT-GENERATION PNEUMOCOCCAL PIPELINEFOUNDATION
Awarded Breakthrough Therapy Designation in Pediatric and Adult Populations
Mik
e N
ally
-
PNEUMOCCOCAL MARKET EXPECTED TO REMAIN LARGE WITH SIGNIFICANT ADDITIONAL OPPORTUNITY
PEDIATRICS
• Represent two-thirds of market
• Even with vaccine progress, still close to 500,000 deaths
annually in children
-
MULTIPLE PROGRAMS TARGETING A MARKET OF OVER $10B GLOBALLY
CMV=Cytomegalovirus; RSV=Respiratory syncytial virus
CMV
Dengue
RSV
• Most common respiratory pathogen in infants with >50,000 hospitalizations each
year in the U.S. alone and >3 million hospitalizations globally
• RSV infection occurs in up to 10% of adults 65 and over in the U.S. each year,
resulting in >175,000 hospitalizations
• Total RSV market estimated to be >$5 billion
66
• #1 non-genetic cause of hearing loss in infants in the U.S.
• 0.3 - 2.0% global prevalence of congenital cytomegalovirus
• >$3 billion market size expected globally
• V160 has potential to be first in class
• 400 million dengue infections annually with 4 billion patients at risk worldwide
• >$3 billion market size across travel and endemic segments
• V181 data suggests potential for all 4 dengue serotypes to be covered by 1 dose
Mik
e N
ally
-
30 YEARS OF HIV INNOVATION CONTINUES
1980s 1990s 2000s 2010s 2020+
1989
Role of protease
published –
AZT launches
1983
HIV is discovered
1996 2000
ACHAP1
Partnership with
Botswana and Bill
and Melinda Gates
Foundation
2007
2018
2017
MK-8591: Investigational
NRTTI for the treatment
and prevention of HIV
Many additional
mechanisms in early
development
CONTINUING TO INNOVATE
67
1998
1African Comprehensive HIV/AIDS Partnerships
Dr. R
oy B
ayn
es
-
Long-Duration Oral
& Implantable Oral
Monthly Implantable Daily Weekly Elimination
Continue to simplify
HIV care
Radical
simplification
of HIV care
Maximize simplicity,
potency and
tolerability
Free patients from
daily dosingAspiring to cure
Potential to reduce riskof HIV infection
↓↓↓ Dosing frequency
↑↑↑ Adherence
Daily dosing for
antiretroviral
suppression
↓↓ Dosing frequency
↑↑ Adherence
Sustained viral
response or cure
CURE
MK-8591: UNIQUE PHARMACOLOGY ENABLING POTENTIAL LONG DURATION THERAPY
TREATMENTPREVENTION [PrEP]
68
Dr. R
oy B
ayn
es
-
HIV REMAINS A PARAMOUNT WORLDWIDE HEALTH THREAT
69
People
newly
infected
with HIV
in 2017
Number
of people
living
with HIV
AIDS-
related
deaths in
2017
36.9M 1.8M 940K
Mik
e N
ally
-
MK-8591: UNIQUE ATTRIBUTES ALIGN WELL WITH UNMET NEED
MK-8591 HIV UNMET NEED
70
Simple,
efficacious
regimens that
support
lifelong
therapy with
high QoL
Extended coverage for
missed doses (forgiveness)
Pill fatigue
Reduced toxicity
Easy, effective
options for PrEP
Mik
e N
ally
-
GEFAPIXANT (MK-7264): EXPLORING ROLE OF P2X3 PATHWAY IN DISORDERS OF SENSORY PATHOLOGY
Development focused on the role of P2X3 receptor mediated signaling in:
• Unexplained or refractory
chronic cough
• Visceral pain syndromes
• Altered sympathetic function
71
P2X3 BlockadeSensory Pathology
• Headache/migraine
• Hypertension
• Pathologic cough
• Bronchoconstriction
• Breathlessness
• Sleep apnea
• IBS-C/D
• Urinary urgency
• Bladder/pelvic pain
• Endometrial-related pain
• Neuropathic pain
• Muscle pain
• Itch
Pathologically
sensitized
afferents
send aberrant
signals of
disease
Blocking
P2X3
receptors
may restore
normal
sensory
function
Pathologies currently being explored
Dr. R
oy B
ayn
es
-
GEFAPIXANT (MK-7264): OPPORTUNITY FOR BROAD APPLICABILITY
72
Chroniccough
Endometrial-related pain
Other sensory
functions
Sleep
apnea
10% global prevalence for chronic
cough, of which ~20% are
refractory chronic cough or
unexplained chronic cough
Impacts ~176 million
women worldwide
~29 million Americans
suffer from sleep apnea,
of which 80% are
undiagnosed
Potential pipeline in a product
Mik
e N
ally
-
DIVERSE PIPELINE WITH STRONG GROWTH POTENTIAL THROUGH NEXT DECADE
73
Durable business with
extensive portfolio, and
pipeline and global
growth opportunity
Broadest I-O program
with strong pipeline of
oncology products to
drive long-term
leadership
Innovative pipeline
targeting areas of
significant unmet need
ONCOLOGYHOSPITAL /
SPECIALTYVACCINES
Mik
e N
ally
-
74
Welcome & Introductions
Financial & Value Creation Overview
Commercial Growth Drivers: KEYTRUDA & Beyond
Animal Health Innovation
Merck R&D Strategy Overview
Pipeline Opportunities
Future of Merck R&D: Panel Discussion
Q&A / Closing Remarks
Lunch Break
Breakout Sessions
Ken Frazier, Chairman and Chief Executive Officer
Rob Davis, Chief Financial Officer and Head of Global Services
Frank Clyburn, Chief Commercial Officer
Rick DeLuca, President, Merck Animal Health
Dr. Roger M. Perlmutter, President, Merck Research Laboratories
Dr. Roy Baynes, Head of Clinical Development and Chief Medical Officer, and Mike Nally, Chief Marketing Officer
Merck Research Laboratories Leadership: Dr. Dean Li, Dr. Fiona Marshall and Dr. Daria Hazuda
Pipeline Deep Dive
Next Generation Discovery
International Opportunity & China
All
All
-
EMBEDDING IMMUNOBIOLOGY ACROSS DISCOVERY EFFORTS
75
• Immunology is linked to most disease states
• Unlocking new opportunities to address unmet needs in areas previously “undruggable”
• Increased understanding of biology and importance of the immune system
• Leveraging experience from immuno-oncology — KEYTRUDA and GARDASIL — across discovery efforts
Immunology is the common thread across disease areas
Immunology
Other
Renal
Infectious
Diseases
Vaccines
Cardio-
vascular
Metabolic
Disorders
Oncology
Neuro-
science
Dr. D
ean
Li
-
DELIVERING OUR MISSION ACROSS MODALITIES
76
• Working across a number of modalities, which allows us to address new and complex biology
• Complexity of biological targets is increasing
• Therapeutic modalities expand the druggable universe
• Choice of modality defines addressable biology and impacts success of the drug
Dr. D
ean
Li
Modality-agnostic approach to research
-
OVER 150 DISCOVERY & EARLY DEVELOPMENT PROGRAMS ACROSS BROAD SET OF DISEASE AREAS
77
Dr. D
ean
Li
1 CRMO – Cardiovascular, Renal, Metabolic, Other
Therapeutic-agnostic approach
CRMO
15%
ID/Vaccines
30%
Neurology
20%
Immuno-
Oncology
35%
% Programs per area
1
• HIV
• Vaccines
• Antibacterial / Antifungal
• Antivirals
• Other
• Neuronal Signaling
• Cell Homeostasis
• Neuroimmunology
• Lipid Biology
• Redox / Stress
• Other
• Heart Failure
• Vascular Disease
• Complications of diabetes / obesity
• Other
• Checkpoint / Costimulatory
• Innate Activation / Immunocytokines
• Tumor Intrinsic
• Myeloid and Stromal
• Metabolism
• Virus and Vaccines
• Other
-
NEW DISCOVERY HUBS
78
Reinvigorated discovery network
• Unleashing the power of Merck Research Labs
• Demonstrating keen scientific experience and insight
• Maximizing the ecosystems of the key scientific and technology innovation hub cities
• Exploring science beyond the boundaries of therapeutic areas
CAMBRIDGEExploring emerging
areas of disease biology
SOUTH SAN
FRANCISCOOur newest, cutting-
edge multi-disciplinary
research facility
LONDONStudying diseases facing
aging populations
Dr. D
ean
Li
-
MERCK’S DISCOVERY STRATEGY
79
Human biology drives our approach to discovery
Understanding of immuno-oncology provides new insights into the role of immunology across every other therapeutic area
Accessing biology through whatever modality necessary
Broad and diversified emerging pipeline of unique molecular entities
New cutting-edge discovery centers and new talent drive our research
Translating breakthroughs in fundamental biomedical research
into meaningful new therapeutics and vaccines
Dr. D
ean
Li
-
CREATE LONG-TERM VALUE FOR PATIENTS, EMPLOYEES AND SHAREHOLDERS
88
Next 5 Years
Strong execution driving sustainable revenue growth, meaningful margin expansion and accelerated bottom-line growth
5-10 Years
Rich pipeline addressing
areas of high unmet need
to drive performance over
the next 5 to 10 years
10+ Years
Revitalized discovery
efforts and increased
expertise in biology to
deliver ongoing scientific
breakthroughs for decades
to come
Anchored by our deep bench of talent
and commitment to our mission
Ken
Fra
zie
r